Cutting Spending – Washington Style

Throughout the past few years, we’ve noted that there’s too much focus on the dollars and cents of the budget. Even Obama and Democrats are talking about billions in spending cuts. It’s beginning to sound like an Old McDonald song: “a few trillion here and a hundred billion there; here a trillion there a billion, everywhere a spending cut.” However, once we cut through the illusory narrative generated by the media, we’ll realize that not a single program or agency is eliminated, at least not without the creation of a new one in its place.

This is the casualty of focusing on numbers instead of actually reducing the size of government. Numbers can be manipulated, even as government continues to play a major role, and even expand its role, into every sector of our economy. We are hearing incessant carping about the scheduled $85 billion in sequester cuts, yet I can’t figure out how many, if any, of the 2,184 assistance programs will be eliminated.

Remember that the cost of an agency, program, or subsidy might not be that high, but its residual effects on the private economy – through market distortions, regulations, and disincentives – are often too big to quantify. The annual budget for the EPA is only about $8 billion, but it promulgates laws and regulations that remove hundreds of billions from the private economy in the form of lower wages, costlier products, and market distortions. These government agencies, programs, and mandates also destroy hundreds of thousands of jobs.

The Washington Post has an insightful presentation on how some of the recent spending cuts turned out to be mere gimmicks and failed to reduce the scope of the federal bureaucracies. Remember the $38 billion in cuts (it was supposed to be $100 billion) that the GOP-led House secured during the first budget battle in April, 2011? Here is how that played out over the past two years:

In the real world, in fact, many of their “cuts” cut nothing at all. The Transportation Department got credit for “cutting” a $280 million tunnel that had been canceled six months earlier. It also “cut” a $375,000 road project that had been created by a legislative typo, on a road that did not exist.

At the Census Bureau, officials got credit for a whopping $6 billion cut, simply for obeying the calendar. They promised not to hold the expensive 2010 census again in 2011.

Today, an examination of 12 of the largest cuts shows that, thanks in part to these gimmicks, federal agencies absorbed $23 billion in reductions without losing a single employee.

Most conservative were already aware of this dog and pony show at the time the deal was negotiated. Rep. Tim Huelskamp warned conservatives that CBO projected the deal would only cut $352 million in real deficits for 2011.

The eternal moral of the story is that we should never believe Democrats when they willingly “place billions in spending cuts on the table.” Government largess is their mother’s milk; they will never surrender it on their own volition.

When assessing potential candidates for House and Senate, instead of asking them how much money we should cut from the budget, we need to start asking which agencies and departments should be eliminated. That is the only way a spending cut will ever mean the same thing it does outside of Washington.